Franchisee does not achieve operating forecast: the interim score.
Court of Roermond
Recently, the court in Roermond rendered an interim judgment between a franchisee and a franchisor, whereby the turnover was one third lower than budgeted by the franchisor. In general, the franchisor’s duty of care entails that the principles on which the franchisee starts his business must be correct.
This concerned the takeover of an existing establishment. The franchisor could therefore know very well what was feasible on the basis of historical turnover figures.
The parties litigate back and forth and submit no fewer than four reports. Franchise and franchisor have contributed so much that it seems inevitable that a lengthy and costly procedure seems unavoidable. The judge therefore aims for a hearing in which the parties can still settle if possible.
In the case of unsatisfactory financial forecasts, it is particularly important which assumptions are used. In other words, whether the underlying business location investigation was in order. If there was no location investigation, the franchisor would in principle lose its first line. Now that the parties are submitting contradictory reports, it is up to the court to make a decision if the hopeful settlement is not realised. It would be good if the parties allowed jurisprudence with regard to unrealized forecasts to lead to a final solution in the short term, so that further litigation is avoided. To be continued!
Mr Th.R. Ludwig – Franchise attorney
Ludwig & Van Dam Franchise attorneys, franchise legal advice Would you like to respond? Mail to ludwig@ludwigvandam.nl
Other messages
When does a franchisor go too far when recruiting franchisees?
The judgment of the Court of Appeal of Arnhem-Leeuwarden on 5 February 2019 dealt with whether the franchisor had acted impermissibly when recruiting the franchisees.
Advisory Board on Regulatory Pressure (ATR) advises State Secretary Keijzer about the Franchise Act
In short, it is first advised to actively inform franchisors and franchisees about this amendment to the law.
Post non-competition ban on services and sales franchise
When a franchise agreement ends, many franchisees encounter a prohibition in the franchise agreement to perform similar work for a period of time thereafter
The concept of the Franchise Act: impact for franchisors and franchisees – dated February 5, 2019 – mr. AW Dolphin
Ludwig & Van Dam Advocaten believes that if the draft of the Franchise Act actually becomes law, a lot will change for franchisors and franchisees.
Buy franchise business and the laid off sick employee from 7 years ago
The question is whether a Bruna franchisee, when selling the franchise company to Bruna, should have stated that seven years ago an employee had left employment sick.
Court prohibits Domino’s unilateral area reduction when extending franchise agreements – dated January 28, 2019 – mr. RCWL Albers
On January 9, 2019, the District Court of Rotterdam rendered a judgment in a lawsuit initiated by the Association of Domino's Pizza Franchisees and all its members (almost all Domino's franchisees).